Quick Answer
A Home Equity Investment (HEI) — also called a shared equity agreement — lets you cash out home equity with no monthly payments by sharing a percentage of your home’s future appreciation with an investor. A HELOC gives you a revolving credit line at a variable interest rate, while a Home Equity Loan (HEL) provides a lump sum at a fixed rate. In 2026, HEI companies like Point, Unison, and Hometap are expanding rapidly as elevated interest rates make traditional borrowing expensive — but HEI can cost far more than a HELOC if your home appreciates significantly.
Key Takeaways
- HEI requires zero monthly payments — the investor earns a return when you sell or settle the agreement, typically within 10–30 years
- HELOCs and HELs charge interest but you retain 100% of your home’s appreciation, making them cheaper in rising markets
- HEI companies typically take 15–40% of your home’s value change, which can exceed $100,000 in fast-appreciating markets over a decade
- Credit score requirements are dramatically lower for HEI (as low as 500) compared to HELOCs (typically 680+), making HEI accessible to more homeowners
- HEI is best suited for homeowners who plan to sell within 10 years, have limited income, or can’t qualify for traditional lending
- All three options put your home at risk — understanding the true cost of each is critical before signing anything
What Is a Home Equity Investment (HEI)?
A Home Equity Investment (HEI) — sometimes called a Home Equity Agreement (HEA) or shared equity agreement — is a financial contract in which an investor provides you with a lump sum of cash in exchange for a share of your home’s future value. Unlike a loan, there is no interest rate and no monthly payment. Instead, the investor profits (or loses) based on how your home’s value changes over the agreement term.
When the agreement ends — either when you sell the home, refinance, or reach the maturity date — you buy out the investor’s share based on your home’s appraised value at that time. If your home has appreciated, the investor receives more than they invested. If it has depreciated, some agreements share in the loss as well.
How HEI Works Step by Step
- Application: You apply with an HEI company, providing details about your home, mortgage balance, and basic financial information
- Home Valuation: The company orders an appraisal or uses automated valuation models (AVMs) to determine your home’s current market value
- Offer: Based on your equity position, the company offers a lump sum (typically 5–25% of your home’s value) in exchange for a percentage of future value change
- Closing: You sign the agreement and receive funds, typically within 2–4 weeks. Closing costs are usually 3–5% of the investment amount
- Living in the Home: You continue to own and live in the home. You must maintain the property, pay your mortgage and taxes, and may face restrictions on additional borrowing
- Settlement: At the end of the term or when you sell, you repay the investor based on the home’s current value
Major HEI Companies in 2026
| Company | Max Investment | Share of Value Change | Term | Min Credit Score |
|---|---|---|---|---|
| Point | Up to 25% of home value | Adjusts based on risk | Up to 30 years | 500 |
| Unison | Up to 17.5% of home value | Shares appreciation & depreciation | Up to 30 years | Varies |
| Hometap | Up to 25% of home value | Fixed percentage | Up to 10 years | 500 |
| EasyKnock | Up to 75% of home value (sale-leaseback) | N/A (different model) | 3–5 year buyback | 550 |
Point and Unison remain the two largest players in 2026, having expanded into new states and begun offering hybrid products that combine equity sharing with traditional lending features. Hometap focuses on shorter terms (10 years max), which can make costs more predictable.
HELOC vs Home Equity Loan vs HEI: Side-by-Side Comparison
| Feature | HELOC | Home Equity Loan | Home Equity Investment |
|---|---|---|---|
| Monthly Payments | Variable (interest + principal during repayment) | Fixed (principal + interest) | None |
| Interest Rate | Variable (typically prime + 1–3%) | Fixed (typically 7.5–10% in 2026) | No interest rate |
| How Investor Gets Paid | You pay interest to the lender | You pay interest to the lender | Share of home value change at settlement |
| Typical Amount | Up to 80–85% combined LTV | Up to 80–85% combined LTV | 5–25% of home value |
| Term | Draw: 5–10 yrs, Repay: 10–20 yrs | 5–30 years | 10–30 years |
| Credit Score Minimum | 680+ (740+ for best rates) | 680+ (740+ for best rates) | 500+ |
| Income Verification | Required (DTI typically under 43%) | Required (DTI typically under 43%) | Minimal |
| Closing Costs | 2–5% of credit line | 2–5% of loan amount | 3–5% of investment amount |
| Foreclosure Risk | Yes | Yes | Yes (if terms violated) |
| Tax Deductibility | Yes, if used for home improvements | Yes, if used for home improvements | No |
| Access to Funds | Revolving (borrow, repay, reborrow) | One-time lump sum | One-time lump sum |
| Predictability | Low (variable rates) | High (fixed payments) | Low (depends on home value) |
Use our HELOC repayment calculator and home equity loan monthly payment calculator to model exact costs for your situation.
When a Home Equity Investment Makes Sense
1. You Cannot Afford Monthly Payments
The single biggest advantage of an HEI is the absence of monthly payments. For homeowners on fixed incomes — retirees, people between jobs, freelancers with irregular income — this can be the difference between accessing equity and being locked out entirely.
Consider a homeowner who needs $50,000 but cannot add $400–$600 per month to their budget. A HELOC or HEL would create financial strain, while an HEI provides the cash with no ongoing obligation. The cost comes later, at settlement.
2. Your Credit Score Is Below 680
Traditional HELOC and home equity loan lenders typically require a credit score of 680 or higher, with the best rates reserved for scores above 740. HEI companies like Point and Hometap accept scores as low as 500, making them accessible to homeowners who are rebuilding credit or have past financial difficulties.
If your credit score is the only barrier to accessing equity, an HEI may be your most viable option. However, remember that improving your credit score over 12–24 months could open up significantly cheaper traditional options. See our guide on home equity loan credit score requirements for strategies to qualify.
3. You Plan to Sell Within 5–10 Years
The shorter your holding period, the more predictable your HEI cost becomes. If you know you’ll sell your home within the next decade, you can calculate your approximate buyout cost with reasonable confidence.
For example, if you receive $40,000 from an HEI with a 20% share of value change, and your home appreciates from $400,000 to $450,000 over 5 years (2.3% annual appreciation), you’d owe approximately $10,000 at settlement (20% of the $50,000 gain). Total cost: $10,000 on a $40,000 advance — effectively a ~4.6% annualized cost.
In comparison, a HELOC at 9% interest on a $40,000 draw over 5 years would cost roughly $18,000–$22,000 in total interest, making the HEI significantly cheaper in this scenario.
4. You Need Funds for Non-Housing Purposes
HELOC and HEL interest is only tax-deductible when the funds are used to “buy, build, or substantially improve” your home (per the Tax Cuts and Jobs Act). If you’re using equity for education, starting a business, medical expenses, or other purposes, you lose the tax advantage of traditional lending.
Without the tax deduction, HEI’s “no interest” model becomes more competitive. The trade-off is giving up future appreciation instead of paying interest — a fundamentally different kind of cost.
5. You Want to Avoid Rate Risk
With the Federal Reserve’s rate policy uncertain through 2026, HELOC borrowers face the risk that variable rates could increase further. A Home Equity Loan locks in a fixed rate but at a premium (typically 0.5–1.5% higher than HELOC rates). HEI eliminates rate risk entirely — there is no interest rate to fluctuate.
For homeowners concerned about rate increases, this predictability has real value. Use our HELOC variable rate simulator to see how rate changes could affect your payments.
When a HELOC or Home Equity Loan Wins
1. Your Home Is in a Rapidly Appreciating Market
This is the most important consideration. In markets where homes appreciate at 5% or more annually, giving up even a modest share of value change can be extraordinarily expensive.
Example: A homeowner with a $500,000 home receives $50,000 through an HEI with a 25% share of value change. Over 10 years, the home appreciates at 6% annually, reaching $895,000. The homeowner owes the investor 25% × $395,000 = $98,750 at settlement — nearly double the original advance.
A HELOC at 9% on a $50,000 draw would cost roughly $35,000–$45,000 in total interest over the same period — less than half the HEI cost in this scenario.
2. You Have Strong Credit and Income
If your credit score is above 740 and your debt-to-income ratio is under 36%, you’ll qualify for the best HELOC and HEL rates available. In 2026, prime borrowers can access HELOC rates as low as 7.5–8.5%, making traditional borrowing significantly cheaper than equity sharing for most scenarios.
3. You Need Ongoing Access to Funds
A HELOC’s revolving structure is unmatched for flexibility. You can borrow $20,000 for a renovation, repay it, then borrow $15,000 for education expenses — all from the same credit line. An HEI provides a single lump sum with no ability to draw additional funds later.
This makes HELOCs ideal for projects with uncertain costs, like home renovations where the final budget may change. See our home equity loan for renovation cost guide for detailed budgeting strategies.
4. You Plan to Stay in Your Home Long-Term
If you intend to remain in your home for 20+ years, the compounding cost of sharing appreciation becomes a serious concern. A home that appreciates at 4% annually for 20 years more than doubles in value — and an HEI investor’s share of that growth could be staggering.
For long-term homeowners, a fixed-rate home equity loan provides the cheapest, most predictable path to accessing equity.
Real-World Cost Comparison: Three Scenarios
Let’s compare all three options for a homeowner with a $500,000 home ($300,000 mortgage, $200,000 equity) who needs $50,000.
Scenario A: Moderate Appreciation (3% Annual)
| HELOC (9% variable) | Home Equity Loan (8.5% fixed) | HEI (20% share) | |
|---|---|---|---|
| Amount Received | $50,000 | $50,000 | $50,000 |
| Monthly Payment | ~$375–$625 | ~$620 | $0 |
| Total Cost Over 10 Years | ~$38,000 | ~$34,500 | ~$29,000 |
| Total Cost Over 15 Years | ~$52,000 | ~$47,000 | ~$56,000 |
| Cost as % of Advance | 76% | 69% | 58% (10yr) / 112% (15yr) |
HEI total cost based on 3% annual appreciation: $500K → $672K at 10 years (+$172K × 20% = $34,400) → $780K at 15 years (+$280K × 20% = $56,000)
Scenario B: High Appreciation (6% Annual)
| HELOC (9% variable) | Home Equity Loan (8.5% fixed) | HEI (20% share) | |
|---|---|---|---|
| Total Cost Over 10 Years | ~$38,000 | ~$34,500 | ~$79,000 |
| Total Cost Over 15 Years | ~$52,000 | ~$47,000 | ~$158,000 |
HEI cost based on 6% appreciation: $500K → $895K at 10 years (+$395K × 20% = $79,000) → $1,198K at 15 years (+$698K × 20% = $139,600)
Scenario C: Flat or Declining Market (0% Appreciation)
| HELOC (9% variable) | Home Equity Loan (8.5% fixed) | HEI (20% share) | |
|---|---|---|---|
| Total Cost Over 10 Years | ~$38,000 | ~$34,500 | ~$0–$10,000* |
Some HEI agreements share in depreciation, meaning you’d owe less than the original advance. Others have minimum repayment amounts. Check your specific contract.
Key Insight: HEI is cheapest in flat markets and most expensive in rising markets. HELOCs and HELs have consistent costs regardless of home price movement.
Use our HELOC interest-only payment calculator and home equity loan amortization schedule tools to build exact projections for your numbers.
2026 Market Context and Trends
Why HEI Is Growing in 2026
Several factors have driven the rapid expansion of Home Equity Investment products in 2026:
- Elevated interest rates: With HELOC rates still averaging 8–10%, the “no monthly payment” pitch of HEI companies resonates with cost-sensitive homeowners
- Record home equity levels: The average homeowner with a mortgage has approximately $300,000 in tappable equity as of Q1 2026, according to Black Knight — a massive pool of potential HEI customers
- Regulatory evolution: States like California, Oregon, and Washington have begun establishing clearer regulatory frameworks for shared equity agreements, giving consumers more confidence
- Institutional capital influx: Major investors including pension funds and insurance companies have poured billions into HEI platforms, enabling larger deal volumes and better pricing
CFPB and Regulatory Developments
In 2026, the Consumer Financial Protection Bureau (CFPB) has increased scrutiny of HEI products. Key areas of focus include:
- Disclosure requirements: Ensuring homeowners understand the true cost of sharing appreciation, especially in rapidly appreciating markets
- Valuation disputes: Creating clearer processes for resolving disagreements over home values at settlement
- Predatory terms: Flagging agreements with excessive risk-sharing, hidden fees, or terms that could trap homeowners
This regulatory attention is generally positive for consumers but has not yet resulted in comprehensive federal legislation. State-level protections vary significantly.
Hybrid Products Emerging
A new wave of hybrid products is blurring the lines between traditional lending and equity sharing:
- Point’s HEI+HELOC combo: Allows homeowners to take an HEI alongside a traditional HELOC, accessing more total equity
- Unison’s rent-back option: Homeowners can receive ongoing payments rather than a lump sum, functioning like a reverse mortgage alternative
- Fractional equity products: Some startups allow homeowners to sell specific percentages of equity (e.g., 5% or 10%) with precisely defined terms
These innovations give homeowners more flexibility but also add complexity. Understanding each product’s structure is essential before committing.
Eligibility Requirements Compared
HELOC Eligibility
- Credit score: 680+ (740+ for best rates)
- Debt-to-income ratio: typically under 43%
- Combined loan-to-value: typically 80–85% max
- Income verification: required (W-2s, tax returns, pay stubs)
- Home appraisal: required
Home Equity Loan Eligibility
- Credit score: 680+ (740+ for best rates)
- Debt-to-income ratio: typically under 43%
- Combined loan-to-value: typically 80–85% max
- Income verification: required
- Home appraisal: required
HEI Eligibility
- Credit score: 500+ (varies by company)
- Debt-to-income ratio: not typically a primary factor
- Combined loan-to-value: varies, often up to 75–80%
- Income verification: minimal (some companies verify employment)
- Home valuation: required (appraisal or AVM)
The dramatically lower eligibility bar for HEI is a major factor in its growth. Homeowners who are turned down for HELOCs due to credit or income issues often find HEI as their only equity access option.
For a detailed breakdown of what lenders look for, see our guide on home equity loan credit score requirements.
Risks You Must Understand
HEI-Specific Risks
-
Uncapped cost in appreciating markets: Unlike a loan with a fixed interest rate, the cost of an HEI has no ceiling. If your home doubles in value, you could owe the investor far more than you received.
-
Early termination penalties: Most HEI agreements have minimum holding periods (typically 1–3 years) and charge significant fees for early buyout.
-
Limited consumer protections: As a relatively new product, HEI lacks the extensive regulatory framework that governs mortgages and HELOCs. Consumer protections vary by state.
-
Valuation disputes at settlement: The buyout amount depends on your home’s appraised value. If you disagree with the investor’s appraisal, dispute resolution can be costly and time-consuming.
-
Restrictions on your property: HEI agreements often include maintenance requirements, restrictions on additional borrowing, and sometimes even limitations on renting out the property.
-
Refinancing complications: If you want to refinance your primary mortgage, the HEI lien may complicate the process. Some lenders are hesitant to work around shared equity agreements.
HELOC Risks
- Variable rate increases: Monthly payments can spike if interest rates rise further
- Foreclosure risk: Defaulting on payments can result in losing your home
- Draw period shock: Transitioning from interest-only to full repayment can strain budgets
Home Equity Loan Risks
- Higher rates than first mortgages: Fixed rates are typically 1–3% higher than primary mortgage rates
- Closing costs: 2–5% of the loan amount adds to the total cost
- Foreclosure risk: Same as HELOC — your home secures the loan
For more on managing HELOC rate risks, see our HELOC variable rate simulator and HELOC draw period strategies.
Decision Framework: Which Option Is Right for You?
Choose an HEI if:
- ✅ You cannot afford monthly payments and need cash now
- ✅ Your credit score is below 680 and you can’t qualify for traditional options
- ✅ You plan to sell within 5–10 years and want predictable costs
- ✅ Your home is in a slow-appreciating market where sharing equity is cheaper than paying interest
- ✅ You’re using funds for non-housing purposes (education, business, medical) and lose the HELOC tax advantage anyway
Choose a HELOC if:
- ✅ You have strong credit (680+) and want the lowest overall cost
- ✅ You need ongoing, flexible access to your equity
- ✅ Your home is in a rapidly appreciating market and you want to keep your gains
- ✅ You can handle monthly payments comfortably
- ✅ You’re using funds for home improvements and can deduct the interest
Choose a Home Equity Loan if:
- ✅ You want fixed, predictable monthly payments for budgeting certainty
- ✅ You need a one-time lump sum for a specific project or expense
- ✅ You’re concerned about rate increases and want to lock in today
- ✅ You plan to stay in your home long-term and want consistent costs
Still unsure? Ask yourself:
- What is my credit score? Below 680 → lean toward HEI. Above 740 → lean toward HELOC/HEL.
- Can I afford $300–$700/month in payments? No → HEI. Yes → HELOC/HEL is likely cheaper.
- How long will I stay in this home? Under 10 years → HEI may be cheaper. Over 15 years → HELOC/HEL is likely cheaper.
- Is my market appreciating fast? Over 4%/year → HEI could be very expensive. Under 2%/year → HEI may be cheaper.
- What am I using the money for? Home improvements → HELOC/HEL (tax deduction). Anything else → HEI is more competitive.
FAQ
What is the difference between a Home Equity Investment and a Home Equity Agreement?
A Home Equity Investment (HEI) and Home Equity Agreement (HEA) are generally the same thing — both refer to shared equity arrangements where an investor provides cash in exchange for a share of your home’s future value. The terms are used interchangeably by most companies and regulators, though specific contract structures vary by provider. Point calls its product a “Home Equity Investment,” while Unison uses “Home Equity Agreement.”
How much does an HEI typically cost compared to a HELOC?
The cost of an HEI depends entirely on your home’s appreciation. In a flat market, the HEI cost may be close to zero (or even negative if the agreement shares depreciation). In a market with 4–6% annual appreciation, an HEI with a 20–25% share of value change can cost 2–3 times more than a HELOC at 9% interest over the same period. Always model both scenarios using realistic appreciation estimates for your area.
Can I have an HEI and a HELOC at the same time?
Yes, in some cases. Point offers a combined HEI + HELOC product, and some homeowners maintain both separately. However, your combined loan-to-value ratio must still work within the HEI company’s guidelines, and additional liens may require the HEI investor’s consent. Check with both providers before proceeding.
What happens if my home loses value with an HEI?
It depends on your specific agreement. Unison’s Home Equity Agreement shares in both appreciation and depreciation — if your home loses value, you owe less at settlement. Other companies may guarantee a minimum repayment equal to the original investment regardless of depreciation. Read your contract carefully to understand your exposure.
Is a Home Equity Investment better than a reverse mortgage for seniors?
It depends on your age and goals. Reverse mortgages are only available to homeowners 62+ and offer monthly payments or a credit line with no repayment until you leave the home. HEI has no age requirement and provides a lump sum with no monthly payments. For seniors who want to stay in their home indefinitely, a reverse mortgage may be more cost-effective. For those planning to sell within 10 years, an HEI could be simpler. See our detailed reverse mortgage vs HELOC comparison for a full analysis.
Are Home Equity Investments tax-deductible?
No. Unlike HELOC and home equity loan interest (which may be deductible if used for home improvements), HEI payments are not tax-deductible. The buyout amount at settlement is treated as a capital cost, not interest. Consult a tax professional for advice specific to your situation.
How do HEI companies determine my home’s value at settlement?
Most HEI companies order a professional appraisal at the time of settlement. Both you and the investor typically have the right to dispute the appraisal and request a second opinion. Some companies use automated valuation models (AVMs) as a starting point, with the option for either party to request a full appraisal if they disagree with the AVM result.
Can I buy out my HEI early without selling my home?
Yes, most HEI agreements allow early buyout, but there are usually restrictions. Many companies impose a minimum holding period (1–3 years) and may charge an early termination fee. The buyout amount is based on your home’s current appraised value at the time of early settlement, which means the cost could be higher or lower than expected depending on market conditions.
Bottom Line
Home Equity Investments represent a genuine innovation in home equity access — but they are not a free lunch. The absence of monthly payments is appealing, but the true cost depends entirely on your home’s future value, which no one can predict with certainty.
Choose an HEI when traditional borrowing is out of reach due to credit or income constraints, or when you plan to sell in the near future and want to avoid monthly obligations.
Choose a HELOC when you have strong credit, need flexible access to funds, and want to minimize total cost — especially in appreciating markets.
Choose a Home Equity Loan when you want fixed, predictable payments and a one-time lump sum for a specific purpose.
Whichever option you choose, compare offers from multiple providers, read every line of your contract, and consult with a financial advisor. Your home is likely your largest asset — these decisions deserve careful analysis.
Ready to explore your options? Use our free HELOC calculator to model your payments, or check our home equity loan vs HELOC pros and cons guide for a deeper comparison.